Mercantilism

Mercantilism was the dominant economic theory and practice of European states from roughly the 16th to the 18th centuries. Its core premise was that national wealth was finite and measured in gold and silver — therefore a nation should export more than it imports, accumulate precious metals, and use colonies as sources of raw materials and captive markets for manufactured goods.

Mercantilist policies shaped the colonial world. European powers established colonies not for the benefit of colonists but to enrich the mother country. Navigation Acts, tariffs, and trade monopolies directed colonial commerce through the metropole. Spain extracted silver from the Americas. England's colonial system funneled tobacco, sugar, and cotton through London. France's Colbert built a comprehensive system of state-directed economic development. The triangular trade — European goods to Africa, enslaved people to the Americas, colonial products to Europe — was mercantilism in its most brutal application.

Mercantilism was challenged in the late 18th century by Adam Smith's The Wealth of Nations (1776), which argued that free trade, not protectionism, created genuine prosperity. Smith demonstrated that wealth was not a fixed quantity but could grow through productive labor and specialization. His ideas gradually replaced mercantilism with classical economics, though mercantilist instincts — protectionism, trade warfare, the equation of exports with strength — have never entirely disappeared from economic policy.